As seen on:
CBS moneywatch ~ The Miami Herald
Upcoming shows:
May 8-10th, Uruguay Offshore Investment Conference 2013 | May 13-16th, Moneyshow, Las Vegas 2013 | May 15-18th, Wealth and Liberty preservation 2013, St Kitts | June 2-4th, Private Wealth Management Summit Spring 2013, Ritz Carlton, Atlanta | October 9-13th, 2013 Total Wealth Symposium
Wealth Preservation To Survive the Crash of the US Dollar
The economy is sometimes an unpredictable and unresponsive organism that could lead to wealth or poverty. Previous market crashes have taught investors and financiers that it is hard to protect assets against the sudden loss of value; with too much volatile risk, you are better off looking for alternative ways of securing your assets.
The Need is Real
The rising of commodity and service prices does not reflect in the increase of your income, it only means that you spend more to get the same goods and services you’ve been getting before for less. The future of wealth preservation in general therefore becomes bleak; Your income or savings do not increase to match the inflation, they are subject to an increased rate of expenditure, which begs the question; how am I assured that my 50K now will get me the same value for investment later?
Since the trend dictates a continuous and steady increase in the cost of living, your savings and investments suffer a reduced value. What measures, if any, can you take to secure the value of your savings and investments? What steps in wealth preservation can you take to ensure a profitable and secured value for money despite the inflation?
Target a Stable Market
Stable markets are basically goods that have a constant or increasing price with a steady increase in demand. The need to achieve technical sophistication has given rise to the demand for rare metals. These metals are virtually used in almost all household, commercial and industrial appliances. Increasing efforts in innovation are increasing that need, so the prices of these metals are either stable or increasing. This gives rise to the purchase of strategic metals as investments.
Investing in Rare Metals
These rare metals are a new uncharted ground for investment opportunities. Metals such as Hafnium, Rhenium, Gallium and Indium are an alternative to conventional investments in precious metals. They are a common ingredient in the manufacture of electronic devices and chemical substances. According to National Geographic, eight out of ten devices in the world are manufactured with one or more of these rare metals. This presents a viable and profitable opportunity for wealth preservation.
The Objective and Focused Move
Like all raw materials, rare strategic metals are subject to industrial supply and demand, which means that certain industry sectors provide more viability for investment than others in the mitigation of risk. A focus on industry removes the factors of economical speculation and manipulation since these industries function to match the demand for raw materials and products. Let’s take a look at some of them:
1. The Solar Energy Industry is trending in the need for strategic metals like Indium, Gallium and Hafnium which are used in the production of Solar Cells, Alloys, Turbines and Electrodes among other uses. This industry is constantly growing as industrial, commercial and residential communities worldwide seek alternative sources of energy to substitute the use of petroleum based fuels
2. The Construction Industry is the driving infrastructure for real estate and property buildings, and obviously a constantly growing demand across the world. Strategic Metals like Molybdenum, Chromium, Cobalt and Tantalum are used in the production of tools, ceramics, pipes, valves, paint pigments, corrosion resistant equipment, welding materials among many others.
3. The defense industry covers a large priority in the nation’s agenda, with the use of technology in countering and averting threats, both foreign and domestic. Tantalum, Rhenium, Tungsten, Indium and Gallium are used in electronic components, Laser vision and imaging, projectiles and artillery and aerospace communication devices.
Tantalum the Critical Metal is Also a Conflict Mineral
Tantalum Mining
When the ¨Dodd-Frank Wall Street Reform and Consumer Protection Act¨ was passed July 21st, 2010 there was a part of the bill that pertained to, ¨Conflict Minerals¨. The goal of the conflict mineral portion of the Dodd-Frank bill was to make companies disclose the origin of the minerals used in their devices. This was a good idea, but is much more difficult than I imagine the policy makers thought it was. How do you track metals that are routinely smuggled out of the DRC into the neighboring countries and then exported legally? So far we have no way of verifying the origin of tantalum.
According to the USGS about 50% of all tantalum is mined in Africa including the DRC, Ethiopia, Mozambique and Rwanda. Each country has its own set of geo-political circumstances that make the mining and exportation of tantalum unique. Recently Ethiopia decided to halt mining of tantalum until they build an operational processing plant that will cost $20 million. The tantalum from Ethiopia was found to have high levels of uranium contamination. Annually Ethiopia was producing 350t of tantalum according to the local newspaper. That is a lot of tantalum to take off the world market. Currently the amount of worldwide production is approximately 1100t. Ethiopia states that it has a 15 year supply of tantalum deposits. The Meles regime sees a powerful revenue stream and will not relinquish control. Unlike the DRC, Ethiopia is considered a stable nation.
In places like the DRC where regional warlords control the mining and exportation of tantalum and other conflict minerals the tracking of the metals is much more difficult. The Dodd-Frank Bill was passed with good intentions but following through has shown to be difficult. If a nation like China struggles to reign in the illegal miners within its own borders, how much more difficult will it be for a nation like the DRC which has a weak government.
What is the big deal? Why is this so important? Tantalum has been deemed a, ¨Critical Metal¨, by the USGS. This amazing element can be found in most of your everyday electronics in the form of capacitors. That iPhone, iPad, smartphone and laptop all contain tantalum. The mineral also is used in national defense applications like guidance systems and jet aircraft engines.
All companies share the responsibility in making sure that the world supplies of natural resources are deemed ethical. I have heard people say that we should not import tantalum and other conflict minerals from the DRC. This also has its consequences. Families rely on this mineral for their livelihood. If mining was to end tomorrow in the DRC thousands of families would no longer have an income. There is no blanket fix, for the conflict mineral issue. In the coming years it would be nice to see companies and countries follow the minerals from source to production. Every company should perform checks along the whole process. I can hope that in the future we might be able to stop using the term, conflict minerals.
How feasible is a fair-trade cell phone?
Here’s a simple solution to the controversy over working conditions in the foreign factories cranking out our gadgets: fair-trade electronics.
Give consumers alternatives they can feel good about buying – devices sourced and assembled in a fair, safe and green manner. Then let the market decide whether it values worker rights over cheap devices. The manufacturer that takes the gamble could own a niche in a market rife with conscientious young customers.
Well, it sounds like a simple solution, anyway.
The more I researched the issue and talked to supply chain and fair-trade experts, the more complicated things became.
For starters, no such designation exists for electronics today and it would require buy-in from the industry to establish one, said Heather Franzese, director of new business at Fair Trade USA in Oakland.
Businesses have to want to stamp their products with such declarations to differentiate them in the marketplace. Unlike segments of the food and apparel sectors, however, tech firms have displayed little interest in doing so. Typically it takes a critical mass of consumer and media pressure before industries move in this direction – and it seems we’re not yet there.
But perhaps the thorniest problem comes in determining what fair trade means. Ultimately the standards are subjective and somewhat arbitrary. How do you determine a fair wage in a poor nation with few other employment options? How many hours are too many hours? What qualifies as safe enough? Does “underage” mean 18, 17 or 16
A particular challenge for electronics is determining what parts of the industry’s long supply chain falls under those standards. Depending on how you count, there are hundreds or thousands of components in the average smart phone, using materials sourced from around the globe.
Auditing minerals
Should we hold companies responsible for minerals that might have changed hands five times before arriving at a smelting facility? Can we realistically audit the origins of all those materials?
The answer may simply be no.
“Everyone would like to see a phone that comes from places where everyone is treated fairly, but in practice, I think the supply chain is so global and so complex that it’s virtually impossible to confirm 100 percent,” said Rick Pierson, an analyst at IHS Global Insight.
Take the tantalum capacitor, a component of circuits that holds an electric charge. There are more than 450 in an iPhone, according to IHS.
Some estimates say 20 percent of the world’s tantalum comes from the Congo, where its sale has financed militias that have committed atrocities over the last 15 years, including mass murder, rape and mutilation, according to various reports. These rebels have forced miners to dig up minerals for a pittance in conditions that make Chinese factories look like Google’s corporate campus.
Major volumes of other minerals critical for electronics – like tin, tungsten and gold – are produced under similar conditions throughout Central Africa.
In 2010, Steve Jobs addressed the complexity of tracking these materials in an e-mail to a customer.
“We require all of our suppliers to certify in writing that they use conflict few (sic) materials,” he wrote. “But honestly there is no way for them to be sure. Until someone invents a way to chemically trace minerals from the source mine, it’s a very difficult problem.”
And there are other complexities.
Human-rights groups like the Enough Project have pushed companies to stop using conflict materials in their products, ultimately helping to insert a provision into the Dodd-Frank financial reform law that mandates companies disclose when they buy conflict materials.
The Securities and Exchange Commission has yet to implement the rules, but the fact they’re coming has already led to big changes in the region – for better and worse.
A 2011 opinion piece in the New York Times called the law a catastrophe, saying smelting factories have responded by refusing to buy minerals from eastern Congo, even from legitimate suppliers.
“I heard from scores of artisanal miners and small-scale producers who used to make a few dollars a day digging ore,” freelance writer David Aronson said. “Paltry as it may seem, this income was a lifeline.”
But Aaron Hall, associate director of research at Enough Project, said that companies are figuring it out. He said that Motorola and Kemet, which makes capacitors, have set up systems that allow them to monitor and track materials. Meanwhile, the Electronic Industry Citizenship Coalition, whose members include IBM, Dell and Apple, launched a Conflict Free Smelter Assessment Program to identify facilities that aren’t using conflict minerals.
There are two points worth emphasizing here: One is that the industry is making some real changes, at least in certain parts of the supply chain.
The other is that fair trade doesn’t always come down to a simple moral choice. There are sometimes steep trade-offs and difficult questions. What’s the greater good: providing work to the desperately poor in the Congo, or preventing money from falling into the hands of warlords?
The final uncertainty surrounding the feasibility of fair-trade electronics is the most important one: Would enough consumers buy them?
On this question, there was a perfect split in my interviews between business experts, who said no, and advocacy groups, who said yes.
“The template is there and the world is waiting,” said Jeffrey Ballinger, executive director of labor group Press for Change.
But tablets and smart phones are volume businesses, meaning companies have to sell huge quantities of each short-lived version to make the numbers pencil out. A fair-trade stamp alone may not line up the buyers Ballinger speaks of, whose identities are often as wrapped up in their tech savviness as their political consciousness. To have any chance of success, the products would have to be technically comparable – without being far more expensive.
Big change in cost
In its recent exposé of working conditions at Chinese plants producing Apple products, the Times said various experts estimated building iPhones in the United States would add up to $65 to each device. But that doesn’t address the unsavory origins of the phones’ components – and doing so would surely raise costs higher still.
“Will people pay a social premium? Sure, some people would, but not enough to justify it,” said John Morgan, a business professor at UC Berkeley. “It still won’t make it economically viable.”
None of this is meant to argue that companies should get a free pass – or that we shouldn’t demand U.S. businesses use their clout to raise labor standards around the world.
It’s only to say that there aren’t any simple solutions to complex problems.
By: James Temple
Source: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/03/25/BUI21NOBG6.DTL
Dodd-Frank, Australian Cuts Threaten Tantalum
CAPE TOWN, South Africa — Markets for tantalum metals used primarily in electronics could face short supplies by as early as 2014 in part because of reduced Australian primary production and impending restrictions from the US Dodd-Frank Wall Street reform law aimed at curbing trade of illegal and artisanal produced minerals from the Democratic Republic of Congo that are the source of the metal.
“Consequently the establishment of new tantalum sources outside the DRC we believe is imperative,” Lara Smith, managing director of Johannesburg-based Core Consultants told the Investing in Africa Mining Indaba conference here this week.
Smith said the 2008-2009 recession had caused a reduction in demand for electronics which had a knock-on effect on tantalum supplies but that studies done by her firm had concluded that if the market moves beyond a a conservative steady growth of 4% in the coming years a supply shortage could develop within three years. Consequently we believe that prices should ultimately move to reflect this circumstance.
Smith noted that tantalum reserves are dispersed around the globe with only 10% of proven reserved actually found in Africa, and only 2% located in Central Africa. “That being said, it has been estimated that since 2009 over 50% of the world tantalum supply originated from Africa and a significant portion of that is said to come from artisanal mining in the DRC,” she said.
Smith added that is probably more sensible to talk about the most likely resource base, recognizing that artisanal mine and illegal miners typically do not prove up their reserve base. “If you consider the most likely resource base then Africa would account for about 16% of global resources and Central Africa 9%,” she said.
New technologies leading to miniaturization of electric devices – which have become smaller, lighter and with more processing power – have resulted in increased usage of tantalum, Smith said, noting that in particular, tantalum-based capacitors are on the rise in automotive electronics, mobile phones, personal computers and wireless devices. Capacitors now account for 60% of tantalum consumption, compared to only 51% in 2004, she noted.
While tantalum consumption has increased by around 3.5 million tonnes since 2004, growth in tantalum demand has been relatively lackluster over the past 15 years or so when compared to other metals used in electronic sectors. But Smith said here analysis found that demand from the automotive sector could lead to three-fold growth in tantalum consumption from 2007.
On the supply side, production has traditionally been supplemented by secondary sources, including the US Defense Logistics Agency’s (DLA) stockpile sales, recycling, long-term contracts and sourcing from slags resulting from production of other metals. These secondary sources accounted for about 45% of supply in 2007, Smith noted.
But she noted that since 2007 there have been no DLA sales of tantalum. Additionally, recycling is becoming more difficult because of high costs and the miniaturization of electronic parts, which use less tantalum metal . Retrieval of tantalum from tin slag is also declining, she said, noting that another speaker at the conference had shown fore forecasts of tin supply projecting 0.8% of increased supply in 2012 and 0.2% for the next five years.
“Moreover tantalum is traditionally sold under long-term contracts as opposed to the spot market,” Smith said, noting that end-user companies have always engaged in preemptive buying. During the tech boom tantalum inventories were stored up by companies based on their projection of their demand for their products and when the tech bubble burst those stockpiles were prolonged further.
Similarly. in 2008 the economic recession and ensuing slowdown in consumer demand insured that tantalum consumers were long on supply, Smith said. “We conjecture that the reason the prices are not yet perspective of a deficit market is due to these stockpiles, which we estimate will be depleted over the next 12 months or so as consumer demand improves,” Smith said.
In terms of primary sources, in December 2008 Australia’s Talison Minerals Pty. Ltd., which since been renamed Global Advanced Metals, placed its two Australian mines on care and maintenance. The mines, Greenbushes and Wodgina, together annually accounted for 2.4 million pounds tantalum pentoxide or 38% of global tantalum supply.
Operations of the Wodgina mine restarted in January 2011 but the company indicated that they would only produce around 700,000 pounds per year, Smith said. “In reality we understand that they are producing closer to half a million pounds,” she added.
In addition to the global financial crisis, the other reason cited for halting production in Australia, was the influx of low-priced coltan minerals, from which tantalum metal is extract, coming from the DRC’s illegal and artisanal miners, Smith said.
The Dodd-Frank law enacted in July 2010 requires that companies who consume minerals from conflict zones, in particular tantalum, tin, tungsten and gold from the DRC, have to now show provenance of these minerals and demonstrate that they are not conflict or “blood” minerals.
“This could facilitate the issue of lower priced imports of coltan,” Smith said but noted that the implementation of the act has since been delayed a number of times, most recently in December.
Under the act companies are expected to be granted a grace period of 12 months to either demonstrate provenance or find alternative supply sources, Smith said. “This means that full implementation of this legislation will most likely not come into effect before the end of 2013,” she said. “Subsequently cheaper coltan from the DRC and Rwanda may continue to fill the supply gap and stabilize prices.”
Consideration of current and future tantalum project plans were used by Core Consultants in forecasting the outlook for supply demand and future price direction of this strategic metal, she said.
BY PHILIP BURGERT
Source: http://www.resourceinvestor.com/2012/02/10/dodd-frank-australian-cuts-threaten-tantalum?ref=hp
Demand for minor metals to rise, but supply disruptions a risk
CAPE TOWN (miningweekly.com) – Demand for cobalt, tantalum and rare earth metals – seen as critical minor metals necessary for the continuation of the modern way of life – would continue to increase, but a mining consultancy group said on Monday that there was a risk of supply disruptions.
Speaking at the Investing in Africa Mining Indaba in Cape Town, Core Consultants MD Lara Smith cited the political situation in the Democratic Republic of Congo (DRC), where 50% of the world’s cobalt reserves were found, as a potential risk to supply.
“Moreover, transport logistics in Africa as a whole are in need of a continental overhaul and are extremely problematic and could bring supply disruption,” she said.
Smith also said that China, which refines most of the world’s cobalt, could restrict exports, as the country had already done with other commodities, leading to greater price volatility and increased risk of supply disruptions.
However, she remained bullish about the sector, and said demand for cobalt continued to increase.
Approximately 3.6 g of cobalt is used in almost every single mobile phone battery and the penetration of mobile phones, especially in Africa and Asia is expected to continue to increase driving cobalt demand. With laptop and tablet production expected to double over the next five years, Smith said this would require an estimated 11 000 tons of cobalt.
“Cobalt has numerous uses, including super alloys and catalysts, but its growth in battery application has outpaced all other end-uses and now accounts for over 27% of overall consumption compared to 11% in 2002,” said Smith.
Electric vehicles and electric bicycles are also expected to strongly drive cobalt demand, as approximately 4 kg of cobalt would be required for a hybrid electric vehicle battery and 6 kg for a fully electric vehicle. With between 12- and 13-million hybrid electric vehicles expected to be on the road by 2020, this would necessitate between 20 000 t and 30 000 t of cobalt, said Smith. Increased manufacture of electric bicycles and continued demand for aircraft would add further upward pressure on the metal.
Smith said that tantalum was similar in that Core Consultants expected demand of the metal to increase, as the miniaturisation of electronic devices has resulted in higher use of tantalum. The primary requirement for tantalum was now in capacitors for application in automotive electronics, mobile phones, computers and wireless devices.
“The 2008/9 recession caused a reduction in the demand for electronics which had a knock-on effect on tantalum, however if we assume a conservative steady growth rate of 4% in coming years the demand will be perfectly balanced. Growth above 4% will result in a supply shortage as early as 2014. Consequently we believe that prices should ultimately move to reflect this deficit,” said Smith.
With China having reduced their export quota of rare earth metals by 40% in 2010 there is continued concern for the supply of these metals. Smith noted particularly that deficits of selected rare earth metals could affect a number of industries including those producing solar panels, fluorescent bulbs, wind turbines and electric car batteries.
“Considering all the rare earth (metals) then we project a surplus market by 2014, however if we consider only . . . critical rare earths then even on those optimistic projections it leads us to the conclusion that the market will be in deficit by some 20 000 t as early as 2015.”
By: Jean McKenzie
Source: http://www.miningweekly.com/article/demand-for-minor-metals-to-rise-but-supply-disruptions-seen-as-risk-2012-02-06
No future without scarce metals
(Nanowerk News) It is not just in laptop computers, mobile telephones and LED screens that scarce metals are to be found but also in solar cells, batteries for mobile technologies and many other similar applications. The rising demand for these metals increases the risk of a bottleneck in supplies.
Empa researchers and representatives from industry explained at the “Technology Briefing” why scarce metals are essential for many key technologies and how an impending scarcity might be avoided.
“There is no future without scarce metals!” This was the very clear message with which Peter Hofer, a member of Empa’s Board of Directors, greeted guests at the recent Technology Briefing on scarce metals held at the Empa Academy. After all, it is scarce metals in batteries and motors that keep electric vehicles rolling and which, in automobile catalytic converters, clean up the exhaust gases. Hofer again: “Materials with special properties are essential if we are to find solutions to the problems caused by our ever-increasing mobility requirements.”
The term scarce metals includes gallium, indium, cobalt and the platinum metals, in addition to the rare earth metals which are used (together with iron and boron), for example, to make the very strong magnets needed in wind turbines. And manufacturers like to use tantalum for the capacitors on mobile telephone printed circuit boards (PCBs) because this transition metal, when used in these tiny components, enables them to store and release large amounts of electrical energy. The demand is high, with more than 60 per cent of the tantalum mined being used for this application.
The darker side
But, as Patrick Wäger, the initiator of this Technology Briefing and an expert on scarce metals, explained, everything has a darker side to it. Raw materials which can only be mined and refined in a few countries, for which alternatives are not easy to find and which have a low rate of recycling must are considered to be critical. China, for example, almost completely controls the supply of rare earth metals from which high-performance permanent magnets are manufactured. Wäger, who is a staff member of Empa’s Technology and Society laboratory, added that by imposing export restrictions the Chinese government has forced prices to rise, leading to delivery bottlenecks. Currently great efforts are being made to reduce this dependency by expanding supply capacities outside of China, such as in the USA, Australia or Greenland – with implications also for the environment.
Tantalum, required for high-performance micro-capacitors, is viewed in the microelectronics industry as a material which is difficult to substitute, and to date it has not been possible to recover it from end-of-life products. Particularly worrying are the facts that tantalum is illegally mined in certain Central African countries under degrading conditions, and the profits from its sale are used to finance civil wars.
“Swiss companies also need to think closely about how they can reduce this dependency and avoid the possibility of delivery bottlenecks, ” remarked Jean-Philippe Kohl, the head of Swissmem’s Economic Policy Group. A recent survey of the industry association’s members in the Swiss mechanical engineering, electrical and metal sectors showed that every single company contacted used at least one of the critical raw materials. In order to protect themselves from possible shortages many of the companies had signed long-term delivery contracts with their suppliers. The others are cooperating with research institutions, either to develop alternative raw materials and technologies, or to optimize existing processes.
Alternatives from research labs
As an example of this approach, Stephan Buecheler explained how Empa’s Thin-Films and Photovoltaic laboratory was working to reduce the thickness of the critical tellurium layer in flexible solar cells which use cadmium telluride (CdTe) as the active material. Similarly, efforts are being made in solar cells based on copper-indium-gallium-diselenide (CIGS) to replace the critical indium oxide with zinc oxide. In making these changes no loss of performance is expected. Quite the opposite, in fact – the aim is to increase the efficiency of these devices by optimal use of raw materials and fast processes. Researchers have already shown that this is possible, having set a new efficiency record last year.
Again with the aim of reducing scarce metal usage, the institution’s Internal Combustion Engine laboratory has developed an extremely efficient and economic foam catalyst. Changing the form of the ceramic substrate has enabled the use of less of the noble metals palladium and rhodium in comparison to conventional catalysts. In collaboration with Empa’s Solid-State Chemistry and Catalysis laboratory, the motor scientists are conducting research work on regenerative exhaust gas catalysts which employed perovskites instead of scarce metals. The former are multifunctional metal oxides which, because of their special crystal structure, are capable of transforming heat directly into electrical energy.
The “recycling” challenge
Despite all the doom and gloom, we will not have to do without scarce metals entirely. As Heinz Boeni, head of the Technology and Society laboratory, maintained there is of course a reserve of scarce metals to be found in end-of-life electrical and electronic products. While natural primary deposits are being used up, the “anthropogenic” secondary deposits created by man are increasing continuously. In a ton of natural ore as mined there is typically about 5 g of gold. In a ton of discarded mobile telephones, on the other hand, there is about 280 g, while the same weight of scrap PCBs contains as much as 1.4 kg of the precious metal!
But recovering scarce metals is anything but easy. “You can’t just pull them out from electronic waste with a screwdriver and a hammer. The recovery process is at least as complex as the design and development of the old appliances themselves”, recycling expert Christian Hagelüken made clear. A large percentage of scarce metals are to be found in the form of very thin layers or mixed with other substances in the form of alloys, added Hagelüken, whose employer, Umicore, is one of the largest recycling companies involved in the recovery of precious metals from complex waste material. Recycling scarce metals demands the use of complicated recovery processes.
Furthermore, suitable recovery processes alone are not enough to guarantee high recycling rates. According to the experts it is necessary to keep an eye on the whole recycling chain, from collection, disassembly and sorting of the scrap to the actual recovery process itself. The greatest efforts are in vain if, as is the case in certain countries, end-of-life computers and other electronic appliances are exported to developing and threshold countries where the scarce metals are lost through the inappropriate treatment of the electronic waste, which also represents a danger to human health and the environment. Or, if with a mechanical disassembly – which is common today in Switzerland – the scarce metals are dissipated into fractions from which they cannot be recovered.
Source: http://www.nanowerk.com/news/newsid=24127.php
Cobalt, tantalum and rare earths among main topics at indaba’s commodities review
Cobalt a Rare Industrial Metal
The increased global interest in minor metals will shape the Commodities Review and Outlook ferroalloys and minor metals’ presentation at the 2012 Investing in African Mining Indaba, says commodity research and consultancy company Core Consultants.
Feature speaker, Core Consultants MD Lara Smith, tells Mining Weekly the company will particularly highlight minor metals cobalt and tantalum, as well as rare earths, as these metals are increasingly used in everyday technology and are experiencing an increase in demand.
“Cobalt, for instance, is used in lithium batteries and, with the manufacturing of electronic devices booming, we are seeing greater demand for cobalt as most electronic devices, such as mobile phones, tablets and laptops, rely on this type of battery for power,” she explains.
Further, she notes that 50% of global cobalt reserves are along the Copperbelt in the Democratic Republic of Congo (DRC) and Zambia, with only 5% of copper refined in the DRC and the rest refined in China.
However, Smith highlights that, although cobalt represents an opportunity for Central Africa through global demand, supply will be a challenge.
“Mining licences have been granted in the DRC but logistics are still a major concern,” she says.
Nevertheless, Smith predicts the price of cobalt will increase if supply is disrupted.
Meanwhile, tantalum, which is used in the production of capacitors for automotive and electronic equipment, is also experiencing increased demand.
“Supply of tantalum was traditionally supplemented by secondary sources, including DLA inventory sales and recycling. However, in 2007, the DLA ceased selling tantalum.
“Recycling has become increasingly costly as, in many instances, the recovery costs outweigh the extraction of tantalum owing to the miniaturisation of electronic devices.”
Also experiencing high demand are rare earths, the bulk of which are concentrated and produced in China.
Smith says substantial funds have been raised by Japan and invested in the research and development of rare earths recycling methods, as more countries attempt to diversify away from reliance on Chinese rare- earth material.
She notes that the introduction of new rare earths producers in other countries will be costly, compared with China, where the orebodies are more favourable and amenable to extraction and capital, and labour and environment costs are lower.
Smith will also provide Core Consultants’ price projections for these metals to attendees of this year’s Mining Indaba.
By: Reggie Sikhakhane
Source: http://www.miningweekly.com/article/cobalt-tantalum-and-rare-earths-among-main-topics-at-indabas-commodities-review-2012-01-27
Clash on Dodd-Frank ‘conflict minerals’
Faith leaders and business groups are colliding over a coming SEC ruling on little-known provisions of Dodd-Frank which require companies to track the use of “conflict minerals” in their production of certain consumer products.
One section of Dodd-Frank requires businesses to track – but not halt – the use of so-called conflict minerals from the Democratic Republic of the Congo, including a private sector audit of tracking methods. Another requires those involved in the commercial development of oil, natural gas, or minerals to disclose payments made to governments.
“It’s terrible what we’ve allowed to go on over the last few years without the world paying more attention to it,” said Rep. Jim McDermott (D-Wash.), on a conference call Wednesday with faith leaders. “As many as 7 million people have been killed… this is a mechanism by which we could cut off the flow of money to the rebels [in the Democratic Republic of the Congo]. The rebels are controlling the mines, and selling minerals on the black market.”
The SEC will soon make a decision on how to interpret the law, and certain business groups are suggesting that the sections would needlessly increase compliance costs.
“We’re concerned that industry pressure on the SEC will be so intense that they’ll water down the law and it’ll become ineffective,”said Corinna Gilfillan, the head of Global Witness, a human rights group.
Conflict minerals are found in all sorts of consumer products, and are widely used in electronics. The four main minerals mined in the Congo are tin, tantalum, tungsten and gold. Tin is used in circuit boards, tantalum in electronic capacitors, tungsten to allow mobile phones to vibrate, and gold as a coating for wires.
Heavyweights like the Chamber of Commerce, the American Petroleum Institute and the National Association of Manufacturers have expressed concerns about the provisions.
On the other end, religious figures have stepped up to join human rights groups in urging for a full enactment of the conflict mineral provisions.
“There is broad consensus in the religious community that transparency of minerals coming from conflict regions is a vital responsibility… we’re all concerned with trying to get conflict minerals out of the system,” said Rabbi David Saperstein, director of the Religious Action Center of Reform Judaism, on the conference call.
The faith leaders emphasized that their religions called them to treat other human beings with respect, which compelled them to support the Dodd-Frank provisions.
“What would it mean for us to be a neighbor to everybody in the supply chain used to make the clothes we wear, the computers we type on, and the cars that we drive? Our call to love is not defined by geographical proximity,” said Lisa Sharon Harper, director of mobilizing for the Christian group Sojourners. “We are all responsible for being good neighbors. It doesn’t matter if we have a good excuse… the people in the Congo are made in the image of God.”
“In the Jewish tradition, according to the Talmud, it was absolutely clear that there has to be transparency in the way that businesses went about selling their products. There were explicit prohibitions against deception, against watering down wine, against claiming something was something that it was not,” added Saperstein, also an appointee to the White House Council on Faith-Based and Neighborhood Partnerships.
By: Tim Mak
Source: http://www.politico.com/news/stories/0112/72002.html
Conflict-Free Minerals Reform In The Congo: What You Can Do
The Democratic Republic of the Congo: a region marked by violent conflict since 1996 in which torture, mass rape, forced displacement, and mass murder have been going on for years without much relief. It is a region in which armed groups are able to propagate the violence through the sale of the Congo’s mineral resources.
According to the Enough Project’s Raise Hope for Congo Campaign,
“Armed groups earn hundreds of millions of dollars per year by trading four main minerals: the ores that produce tin, tantalum, tungsten, and gold. This money enables the militias to purchase large numbers of weapons and continue their campaign of brutal violence against civilians, with some of the worst abuses occurring in mining areas.”
Most of these “conflict minerals” are used in the production of electronic devices in a process involving supply chains marked by a disturbing lack of transparency, so that by the time products such as cell phones or laptops end up in the hands of consumers, there is no way to know whether the purchase of those products contributed to the income of armed groups in the Congo.
The goals of many concerned activists are to find a way to ensure transparency in companies’ supply chains and to pressure companies found to be using conflict minerals to discontinue purchasing those minerals. The market for conflict minerals then, ideally, would be limited in terms of profit, reducing resources available to the armed groups, and thus pushing the armed groups toward peaceful resolution of the conflict which could open the region to other reforms.
There have been arguments that the initial attempts toward conflict-free policies have actually been detrimental to the Congo, by driving companies to search for minerals elsewhere, therefore crippling the economy and reducing the income of the general population. However, the UN Group of Experts recently issued a report stating that a conflict-free resolution proves to be an “important catalyst for traceability and certification initiatives and due diligence implementation in the minerals sector regionally and internationally,” and serves to reduce “the level of conflict financing provided by these minerals” in regions that have begun to comply to the due diligence guidelines. So, it seems that passing and implementing conflict-free resolutions are the first steps toward true reform and peace in the Congo.
Why not focus the fight for conflict-free reform on college campuses, which house a “particularly coveted demographic of electronics companies,” namely, students?
The Enough Project’s Raise Hope for Congo Campaign and STAND, a Student Anti-Genocide Coalition, have created the Conflict-Free Campus Initiative, a “nation-wide campaign to build the consumer voice for conflict-free electronics, such as cell phones, laptops, and other devices that will not finance war in eastern Congo.” By focusing on college campuses, the initiative “draws on the power of student leadership and activism to encourage university officials and stakeholders, both of whom are large purchasers of electronics and powerful spokespersons, to commit to measures that pressure electronics companies to take responsibility for the minerals in their supply chains.”
Organizing the student voice at the university level not only expresses the collective desire of individuals to ensure that they and their university do not participate in the perpetuation of the conflict in the Congo, but it also sends a powerful message to both political and corporate entities that consumers care about policies of those entities that may support the conflict. The Conflict-Free Campus Initiative explains:
“Universities are also a large client for most electronics companies and represent a large section of the buyers’ market for consumer electronics. By raising our collective voice as consumers, we can actually bring about a shift in corporate and government policy and help bring peace to Congo.”
Eight universities have issued conflict-free resolutions, including Stanford University, the University of Pennsylvania, and Duke University; more than sixty other colleges and universities throughout the United States and Canada have begun campaigns to do the same (including Yale University, Harvard University, Dartmouth College, Brown University, UC Davis, UCLA, UCSB, UCSC, Notre Dame, and Georgetown University).
The activism geared toward passing these conflict-free initiatives on college campuses has been successful in inspiring activity at the government level. California passed a bill prohibiting “state agencies from signing contracts with companies that fail to comply with federal regulations aimed at deterring business with armed groups in eastern Congo,” the first state bill to be passed regarding conflict minerals. Massachusetts is now also considering a conflict-free bill. Two cities, Pittsburgh, PA and St. Petersburg, FL, have also passed conflict-free resolutions.
If enough colleges, universities, towns, cities and states take the initiative in decisively acting to prevent the perpetuation of the conflict in the Congo by taking steps toward becoming conflict-free, perhaps the income of the armed groups committing mass rape and murder will be decreased sufficiently to prompt the beginnings of an end to the conflict.
Once the fighting ends, addressing the root causes of the conflict – including ethnic tensions – can be addressed through effective institutional reforms. But the fighting has to end before that can happen, and the fighting cannot end unless the actors in the conflict cannot afford to fight.
By: Cara Palmer
Source: http://www.neontommy.com/news/2012/01/conflict-free-minerals-congo-reform
Critical Metals Vital to Our Lives in Tight Supply
Rare Earth Elements
We begin 2012 similar to how we started 2011 when it comes to rare earth, rare technical metals and rare industrial metals. China has over 90% of production and refining. The US and EU governments are scrambling to legislate, source, produce, open and reopen mines. The West has decided to continue down the road of the idea that the markets will take care of the supply and price of these metals. What is alarming is how easily the West was lulled to sleep by China´s ability to supply the world its metals cheaply and efficiently. The West concentrated on making money trading stocks and futures that dealt with these commodities. China concentrated on building the most extensive mining industry in the history of man. Here in 2012 the Department of Energy in the USA has approved a spending bill that includes $20 Million to focus on the supply issues of these metals.
The metals I am speaking about are so vital to our everyday lives. These metals are found in your mobile phones, computers, LCD and LED TV´s, hybrid cars, solar power, wind power, nuclear power, efficient lighting and medical technologies. Here is a list of metals that have been deemed critical.
- Indium RIM (Solar, Mobile Phones, LCD)
- Tellurium RIM (Solar, Computers, Semi-conductors)
- Gallium RIM (Solar, Mobile Phones, LED´s, Fuel Cells)
- Hafnium RIM (Processors, Nuclear, Lighting, Plasma Cutting Tools)
- Tantalum RIM (Capacitors, Medical Implants, Mobile Phones, Nuclear)
- Tungsten RIM (Nuclear, Armaments, Aviation)
- Yttrium REE (Lighting, Medical Technology, Magnets in Hybrids)
- Neodymium REE (Magnets in Wind power, Super Magnets, Hybrid Vehicles)
- Dysprosium REE (Computers, Nuclear, Hybrid Vehicles)
- Europium REE (Lighting, LED´s, Lasers
- Lanthanum REE (Hybrid Vehicles, Magnets, Optics)
- Cerium REE (LED´s, Catalytic Converters, Magnets)
RIM=Rare Industrial Metal REE=Rare Earth Element
The supplies of these metals could hold back the production of green technologies. According to the latest report by the Department of Energy, ¨Supply challenges for five rare earth metals may affect clean energy technology deployment in the years ahead¨. If Green technology is to become main stream, the costs of these technologies have to reach cost parity with traditional energy sources. As long as there are serious supply issues with these metals the costs can´t reach these levels. The other option is finding alternatives like Graphene and Nanotechnologies.
The US and EU need supply chains of the metals that include both mining and refining of these metals. Relying on sovereign states for critical metals such as these, leave a nation vulnerable to outside influence in both politics and economics. Environmentalists have succeeded in influencing politicians to close mines throughout the West. Politicians have legislated the mining industry into the position it is in today. The Western nations must start now to build its supply chain or continue to be at the mercy of the BRIC (Brazil, Russia, India and China) nations for its metal needs.
The best the West can do now is provide, enough metals to meet its own demands. China has reached a point where it can now demand that certain industries produce their products there. If a company decides to try to produce the product in another country China will make producing that item cost prohibitive outside of China by raising the prices of the metals.
The demand for the products these metals are used to produce, are showing few signs of slowing down even in a so-called recession. Governments are subsidizing Green technology, people are buying mobile phones across the planet and everybody wants a nice flat screen TV. Will 2012 pass without countries truly taking this opportunity to fix the problem or will they step up and make the hard decisions which can put the countries back in control over their own destiny?
Investing in Inefficient Markets and the Efficient Markets Hypothesis
Rare Earth Metal - Tantalum
There’s a nice little point being made here in the WSJ. We’ve all pretty much internalised the Efficent Markets Hypothesis: that markets are efficient at processing the information which might affect prices in a market. We’ve also all pretty much internalised the idea that as a result of this we’re not going to beat those markets. And nor are most fund managers most of the time.
To which, as the WSJ says, the come back is yes, but there are plenty of markets out there (weird foreign ones say, or small caps in certain industries) which are still inefficient because, well, there’s not enough players in them to make them efficient. And it’s certainly possibly true that this is so.
However, what the WSJ then points out is that if this were so then those funds investing in those inefficient markets should be beating the general market: and while certain funds do do so, no class of funds does so regularly.
All of which pretty much shoots down the contention that there are those inefficient markets in which excess returns can be gained. Or, perhaps, that the fund managers who claim to be following that strategy aren’t very good at following it.
There’s just one point I’d add to this. Something from personal business experience at the wierder end of the metals market. There are most certainly inefficient markets here. When the entire global market for lutetium (yes, I know, you’ve never heard of it) is three or four tonnes a year, worth maybe $1.5 million all told, yes, among 7 billion people we’d think that was a pretty inefficient market.
And it is a pretty inefficient market, truth be told. However, it doesn’t take much interest, much volume, for a market to become efficient in things like price discovery. Take, say, tantalum as an example. Global usage is of the order of 1,000 tonnes a year. Worth, well, depends upon which day you look at the price but in the $300 million to $500 million range perhaps? Yes, I know that looks like a lot of money but that’s the entire size of the whole global market: this is still a very small market indeed. But a pretty efficient one. Absent political problems you’ll not find prices varying by more than 2 or 3 % at any one time. The tantalum price in Hong Kong is roughly within transport costs of the price in Rotterdam, on the other side of the world.
Please note, I’m not saying that the tantalum market is “efficient” in the sense that the market for Apple stock is. Rather, just pointing out that a market doesn’t have to be very big before it’s much closer to that efficient end of the spectrum than the inefficient one at which you can make tonnes of money by exploiting the inefficiencies.
That is, inefficient markets are, almost by definition, small markets. Meaning that they’re just not open to profitable exploitation by any large number of people: for as soon as there’s a large number of people they’re not small markets and thus not inefficient.
By: Tim Worstall
Source: http://www.forbes.com/sites/timworstall/2012/01/13/investing-in-inefficient-markets-and-the-efficient-markets-hypothesis/
Rare earth crisis: Innovate, or be crushed by China
Niobium Crystals
Laptops, cars, smartphones, TVs, MRI scanners, LCD displays, light bulbs, optical networks, jet engines, cameras, headphones, nuclear reactors. It might seem like a random selection of high-tech gizmos, but every single object on that list has one very important thing in common: Their manufacture requires one or more rare earth metals.
Rare earths — a block of seventeen elements in the middle of the Periodic Table — aren’t actually all that rare, but they tend to be very hard to obtain commercially. Generally, rare earth elements are only found in minute quantities in mineral deposits of clay, sand, and rock (earths!), which must then be processed to extract the rare metals — an expensive process, and also costly for the environment as billions of tons of ore must be mined and refined to yield just a few tons of usable rare earths.
Many rare earths are also geochemically rare — they can only be mined in a handful of countries. This is simply down to Mother Nature being a tempestuous so-and-so: Some countries have deposits of rare earths, and some don’t. This results in massively skewed production (China famously produces 97% of the world’s rare earth metals), and, as you can imagine, a lot of national security and geopolitical troubles, too.
It doesn’t stop with rare earths, either: Many other important elements, such as platinum, are only available from one or two mines in the entire world. If South Africa sustained a huge earthquake — or was on the receiving end of a thermonuclear bomb, perhaps — the world’s supply of platinum would literally dry up over night. The continued existence of technologies that rely on platinum, like car exhaust catalytic converters and fuel cells, would be unlikely.
If geochemistry and politics weren’t enough, though, we even have to factor in ethical concerns: Just like blood/conflict diamonds — diamonds that originate from war-torn African nations, where forced labor is used and the proceeds go towards buying more weapons for the warlord — some rare metals could be considered “blood metals.” Tantalum, an element that’s used to make the capacitors found in almost every modern computer, is extracted from coltan — and the world’s second largest producer of coltan is the Democratic Republic of the Congo, the home of the bloodiest wars since World War II. Not only do the proceeds from coltan exports get spent on weapons, but the main focus of the wars were the stretches of land rich in diamonds and coltan.
Also along the same humanist vein, it’s important to note that extracting these rare elements is usually a very expensive and disruptive activity. Indium, probably the single most important element for the manufacture of LCDs and touchscreens, is recovered in minute quantities as a byproduct of zinc extraction. You can’t just set up an indium plant; you have to produce zinc in huge quantities, find buyers and arrange transport for that zinc, and then go to town on producing indium. In short, extracting rare elements is generally a very intensive task that is likely to disrupt or destroy existing settlements and businesses.
The rare earth apocalypse
The doomsday event that everyone is praying will never come to pass, but which every Western nation is currently planning for, is the eventual cut-off of Chinese rare earth exports. Last year, 97% of the world’s rare earth metals were produced in China — but over the last few years, the Chinese government has been shutting down mines, ostensibly to save what resources it has, and also reducing the amount of rare earth that can be exported. Last year, China produced some 130,000 tons of rare earths, but export restrictions meant that only 35,000 tons were sent to other countries. As a result, demand outside China now outstrips supply by some 40,000 tons per year, and — as expected — many countries are now stockpiling the reserves that they have.
Almost every Western country is now digging around in their backyard for rare earth-rich mud and sand, but it’ll probably be too little too late — and anyway, due to geochemistry, there’s no guarantee that explorers and assayers will find what they’re looking for. The price of rare earths are already going up, and so are the non-Chinese-made gadgets and gizmos that use them. Exacerbating the issue yet further, as technology grows more advanced, our reliance on the strange and magical properties of rare earths increases — and China, with the world’s largest workforce and a fire hose of rare earths, is perfectly poised to become the only real producer of solar power photovoltaic cells, computer chips, and more.
In short, China has the world by the short hairs, and when combined with a hotting-up cyber front, it’s not hard to see how this situation might devolve into World War III. The alternate, ecological point of view, is that we’re simply living beyond the planet’s means. Either way, strategic and logistic planning to make the most of scarce metals and minerals is now one of the most important tasks that face governments and corporations. Even if large rare earth deposits are found soon, or we start recycling our gadgets in a big way, the only real solution is to somehow lessen our reliance on a finite resource. Just like oil and energy, this will probably require drastic technological leaps. Instead of reducing the amount of tantalum used in capacitors, or indium in LCD displays, we will probably have to discover completely different ways of storing energy or displaying images. My money’s on graphene.
By Sebastian Anthony
Source: http://www.extremetech.com/extreme/111029-rare-earth-crisis-innovate-or-be-crushed-by-china
PwC survey says “Mineral, metal scarcity would deteriorate”
Rare Earth Elements
LONDON – Scarcity of metals and minerals will become more severe in the next five years, with the automotive, chemicals and energy industries likely to be hit hardest, according to a global survey of company executives by PricewaterhouseCoopers (PwC).
The survey of 69 executives across seven sectors, published on Wednesday, found that European companies were most concerned about a shortage, with 71% of respondents seeing scarcity as a risk, compared with 53% in Asia Pacific and 50% in the Americas.
“Put simply, many businesses now recognize that we are living beyond the planet’s means,” said Malcolm Preston, PwC’s global sustainability leader, in a statement.
Companies pinpointed growing demand for materials and political issues, such as China’s export restrictions on rare earth metals, as the main drivers of scarcity.
Those in the renewable energy, automotive, energy and utilities sectors said they currently faced supply instability, while
those in the aviation, high-tech and infrastructure sectors expected increasing disruption of supply by 2016.
The report suggested that some industries might use scarcity to their competitive advantage. Some 43% of respondents said scarcity offered an opportunity at present, while 59% said opportunities would increase in the next five years, with the automotive sector most positive.
“New business models will be fundamental to the ability to respond appropriately to the risks and opportunities posed by the scarcity of minerals and metals,” PwC’s Preston said.
Despite abundant material reserves in Asia, particularly in China, which produces about 97% of the world’s rare earth metals, Asian firms still expect substantial problems as explosive growth in emerging markets puts pressure on supplies.
PwC listed 14 materials as “critical”, including tantalum, which is used in computers and mobile telephones; fluorspar, found in cement, glass and iron; and lithium, used in wind turbines and batteries for hybrid cars.
Eighty-three percent of surveyed firms said their suppliers considered metal scarcity to be an important issue, but only 61% said they thought their customers were concerned about it.
In Europe, 96% of executives said their governments were aware of the problem, compared with 58% in Asia and 54% in the Americas.
Almost half of companies rated their preparedness for scarcity as ‘high’ to ‘very high’. The renewable energy sector had the highest percentage at 67% who were highly confident about their plans to combat a supply shortage, while just 33% of companies in the chemical and high-tech sectors rated their preparedness as “high” to “very high”.
Source: http://www.business-mongolia.com/mongolia/2011/12/20/pwc-survey-says-mineral-metal-scarcity-would-deteriorate/
Lithium, Cobalt Among Minerals Facing Chronic Shortage, PwC Says
Cobalt a Rare Industrial Metal
Dec. 7 (Bloomberg) — Global manufacturers may face a critical shortage of 14 raw materials over the next five years affecting industries including chemicals, aviation and renewable energy, according to PricewaterhouseCoopers LLP.
Seven manufacturing industries may be seriously affected by a critical shortage of raw materials “which could disrupt entire supply chains and economies,” PwC said in a report today based on a survey of senior executives from 69 manufacturers.
“Many businesses now recognize that we are living beyond the planet’s means,” Malcolm Preston, PwC’s global sustainability leader, said in the report. “New business models will be fundamental to the ability to respond appropriately to the risks and opportunities posed by the scarcity of minerals and metals.”
Beryllium, used as a lightweight component in military equipment, cobalt, used in industrial manufacturing and lithium, used in wind turbines and hybrid cars, were among minerals identified in the report as facing critical shortages. Tantalum and flurospar will also face a shortfall, it said.
By: Jesse Riseborough
Source: http://www.businessweek.com/news/2011-12-07/lithium-cobalt-among-minerals-facing-chronic-shortage-pwc-says.html
Cracking Down on Conflict Minerals
- Photo: Matt Moyer/Getty Images DIRTY JOB: Men and children work at a gold mine in Mongbwalu, Democratic Republic of the Congo, in 2005. The mine is controlled by one of the many warring militias in the area. Electronics firms could face bad publicity for using gold from such mines.
In the jungles and mountains of the Democratic Republic of the Congo, battles are raging, part of a 13-year-long civil war. Most of the world has paid little attention to the murder and rape that still dominates life in the DRC’s eastern provinces. But U.S. electronics companies like HP, Intel, and Apple recently became deeply interested, thanks to a provision on “conflict minerals” that was slipped into a 2010 financial reform law, the Dodd-Frank Act.
The minerals provision is intended to deprive the Congo’s warlords of funds by cutting off sales from the mines they control. It focuses on the ores that produce the “three Ts”: tin, tantalum, and tungsten, as well as gold. Public companies that use these metals in their products will be required to investigate their supply chains, determine if they use metals that were mined in the DRC, and disclose their findings to the U.S. Securities and Exchange Commission (SEC), in their annual reports, and on their websites. If its minerals did originate in the DRC, a company must submit a larger report on whether the purchase of these minerals financed or benefited armed groups in that part of Africa. The SEC is expected to issue final rules for implementing the law before the end of the year, and companies are scrambling to get ready.
While the conflict minerals law applies only to companies that are required to file annual reports in the United States, it’s expected to have an international impact. Since mineral suppliers sell to electronics companies around the world, any change in operations they make for the U.S. market will have ripple effects elsewhere.
The law doesn’t only affect the electronics industry. But the conflict mineral issue has been linked in the public mind to electronics because the three Ts play crucial roles in smartphones, TVs, and laptops. Tin is used in solder and thus found on every circuit board, tantalum is used in capacitors, and tungsten is used in the vibrating motors of many phones.
Electronics companies had been warned that they’d eventually have to account for their use of these minerals. So firms like HP and Intel asked the Electronic Industry Citizenship Coalition (EICC) and the Global e-Sustainability Initiative, two trade groups, to investigate the industry’s options.
The groups found that it’s extremely difficult to determine the origin of the tantalum used in a certain batch of smartphones. But they also realized that only about 45 smelters worldwide deal with the three Ts, buying the ores from suppliers and turning them into pure metals. After several years of research, the industry groups came up with the Conflict-Free Smelter Program, which is currently in the pilot phase for its first metal, tantalum.
The program asks each smelter to allow an annual independent audit of its mineral procurement process. If the auditors are convinced that no minerals are sourced from the Congo’s conflict mines, that smelter is certified as “conflict free,” allowing companies to buy its metals without worry. While the program is voluntary, EICC spokeswoman Wendy Dittmer says many smelting firms believe it’s in their interest to participate.
“Electronics companies are starting to ask questions all the way down their supply chains,” she says. “That certainly makes the buyers of the minerals very interested in being able to talk about their own due diligence.”
There are concerns that the law may backfire. By making the reporting requirements more onerous for companies that source minerals from the DRC, the law may reduce demand from all DRC mines, even those that aren’t in conflict regions and don’t finance armed groups.
These concerns about such a de facto ban led Motorola Solutions to initiate the Solutions for Hope Project, in which Motorola and several other companies formed a relationship with a conflict-free tantalum mine in the DRC’s Katanga province.
To establish the program, Michael Loch, Motorola’s director of supply-chain corporate responsibility, visited the mine and accompanied a shipment of ore along its export route. “This pilot allows our industry to stay engaged in the area,” says Loch. “We didn’t want to abandon the region.” But he acknowledges that it took a lot of effort to get the process in place for one mine and says it may be difficult to scale up the program.
The pilot programs should provide a framework to make compliance easier. Still, companies around the world are waiting for the SEC’s final rules with some anxiety. And there may be some efforts to block the rules’ enforcement through U.S. courts. The U.S. Chamber of Commerce, for one, has discussed the possibility of a lawsuit. The chamber disagrees with the SEC’s initial compliance cost estimate of US $71 million, saying that costs will instead be counted in the billions of dollars.
One thing is already certain about the SEC rules: There will be no fines for using conflict minerals. Even so, activists think it will have its intended effect, because companies will want to avoid bad publicity.
“For years we have been unknowing consumers of these minerals because companies have turned a blind eye,” says Sasha Lezhnev, a policy consultant on conflict minerals with the human rights group Enough. “This will enable consumers to make choices on whether or not to buy products from companies that are sourcing from these mines.”
By: ELIZA STRICKLAND
Source: http://spectrum.ieee.org/semiconductors/materials/cracking-down-on-conflict-minerals
Recent Posts
- How to “Split Up” Business Property as an Asset Protection Strategy
- Introduction to Asset Protection Strategies
- Using Precious Metals as a Powerful Hedge Against Inflation
- Wealth Preservation To Survive the Crash of the US Dollar
- Why In these Turbulent Times, Rare Earth Metals Can be More Precious than Gold
- What are the differences between a Roth and Traditional Individual Retirement Account (IRA)?
- What are Some of the Uses of Rhenium
